The Biden administration has taken aim at Chinese clean-tech imports by raising the Section 301 tariffs last throttled up by Donald Trump in 2018. The immediate impact of the move will be muted, mattering most for batteries used for stationary storage. The new 100% tariffs on electric vehicles could keep Chinese automakers at bay, though few presently export to the US. The tariffs are of no real significance when it comes to sectors like solar and steel.
- The largest tariff hike was on electric vehicles, quadrupling the import duty from 25% to 100%. For now, Chinese EV imports into the US are negligible, far behind Germany, South Korea and Japan. The move looks preventative as the US strives to head off potential low-cost Chinese EV imports and build out its own EV manufacturing.
- For EV batteries, existing barriers facing Chinese supplies dampen the impact of these tariffs. Tariffs or no tariffs, EVs cannot qualify for the IRA’s clean vehicle tax credits if batteries or critical minerals are sourced from foreign entities of concern, a category that includes China.
- Delayed 25% tariffs targeting non-EV batteries beginning in 2026 will have an outsized impact on US stationary storage, as the segment relies on lithium-ion batteries imported from China. By 2026, domestic LFP manufacturing will still not be competitive enough to overcome differences in costs.
- Prohibitive tariff barriers on Chinese solar cells and modules imports have been in place since 2012. The 50% new tariff on solar cells are as such of little consequence.
- Pragmatism: The tariffs balance the push to diversify from China with pragmatism by delaying tariffs on natural graphite and permanent magnets until 2026. China dominates the production of both. While synthetic graphite presents an alternative to the natural kind, the US is set to continue to rely on China for the permanent magnets used for EVs and certain wind turbines.
White paper highlights:
- EV tariffs are more preventative with little immediate impact.
- Understanding indirect exposure to sanctions risk.
- Tariffs on solar won’t have much of an impact on deployment.
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